Titular de Insurance Insights
Volume 4, No.11 - November 2015

In The Know

- Keeping you informed is what it's all about

Review Your Lender Closing Instructions Carefully

We reviewed the following article recently published by the Florida Bar Realty and Trust Law Section, which shared important information with its members. We are sharing this with all of our licensees.

Representatives of the title insurance industry regularly meet with officials from the Florida Office of Insurance Regulation ("OIR") and the Florida Department of Financial Services ("DFS") regarding the regulation of the industry. These meetings focus primarily on forms, rules, and related industry matters.

At a recent meeting, OIR officials focused comments on Sec. 626.9541(1)(a), F. S. That provision reads in pertinent part, "(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE ACTS.-The following are defined as unfair methods of competition and unfair or deceptive acts or practices: (a) Misrepresentations and false advertising of insurance policies. Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any ... statement ... which: 1. Misrepresents the benefits, advantages, conditions, or terms of any insurance policy:"

OIR noted that some lender's general closing instructions require the title agent to make assurances about coverage that may not comply with Florida law, specifically Sec. 627.777, F.S., or Chapter 690-196, F.A.C. Affirmative coverage was cited as an area of concern.

For example, one major lender requires in their general lender closing instructions the following:

Express affirmative coverage against loss is required in connection with each exception which adversely affects the property, such as easements, encroachments, violations of restrictions, common walls, overhang of eaves, porches, decks, roofs, etc.

OIR officials indicated that the title agent that assents to such a closing instruction and agrees to give affirmative coverage over any easement otherwise excepted on Schedule B is possibly misrepresenting the terms of the policy that will ultimately be issued to the lender because such coverage can not be given. While the facts of a given title will control the final analysis, rarely are those available at the time the general loan closing instructions are presented. There was further discussion about the possibility that the requesting lender may violate the statute by making an inappropriate demand.

While we are unaware of any specific instances of enforcement by OIR or DFS against title agents or attorneys, OIR has taken this position against casualty insurance agents that alter a homeowner policy binder or Evidence of Property Insurance ("EPI") to indicate to the lender that the policy covers "full replacement costs" or similar words that misrepresent the actual coverage.

The practice take away should be apparent. Pay attention to both general and special loan closing instructions and negotiate adjustments as appropriate. Failure to do so may result in substantial penalties under Sec. 626.9521, F.S. to both you and the requesting lender.

James C. Russick
V.P. Florida State & Gov't Affairs Counsel
Old Republic National Title Insurance Company

(This article was originally published in the Fall 2015, issue of Action Line, a Florida Bar Real Property and Trust Law Section publication.)

Restrictions on Agency Names

When choosing a name for your insurance agency, please note that the department may disapprove the use of any true or fictitious name, other than the bona fide name of an individual, if it violates certain guidelines. The name cannot:
◦mislead the public in any respect,
◦interfere with or be too similar to another name already being used by another agency or insurance company,
◦state or imply the agency is an insurer, motor club, hospital service plan, state or federal agency, charitable organization, or entity that primarily provides advice and counsel rather than selling or soliciting insurance, or is entitled to engage in insurance activities not permitted under the license you hold or have applied for.

The provisions above do not prohibit you from using the word “state” or “states” in the name of your agency as those terms do not, in and of themselves, imply that the agency is a state agency.

Please see section 626.602, F.S.

Agent in Charge - Requirements, Changes and Responsibilities

Each person operating an insurance agency and each location of a multiple location agency must designate a licensed and appointed agent in charge for each location.
An agent in charge (AIC) is defined as the licensed and appointed agent responsible for the supervision of all individuals within an insurance agency.


Each business location established by an agent or insurance agency must be in the active full-time charge of a licensed and appointed agent holding the required licenses for the lines of insurance transacted at the location. The AIC of an insurance agency may be the AIC of additional branch locations if: (1) insurance activities requiring licensure as an insurance agent do not occur at the location(s) when an agent is not physically present and (2) unlicensed employees at the location(s) do not engage in insurance activities that require licensure as an insurance agent or customer representative.

Each insurance agency and branch office is required to designate an AIC and to file the agent’s name, license number, and physical address of the insurance agency location with DFS at the DFS website. Adding and removing an AIC can be done by going to www.MyFloridaCFO.com/Division/Agents and logging in to the agency's account in MyProfile.


A change of the designated AIC must be reported to DFS within 30 days, and becomes effective upon notification to DFS. An insurance agency location is precluded from conducting the business of insurance unless an AIC is designated by, and providing services to, the agency at all times. When the agent in charge ends her/his affiliation with the agency, the agency must designate another AIC within 30 days. If the agency fails to make such designation within 90 days after the designated agent has ended their affiliation with the agency, the agency license automatically expires 91 days after the designated agent ended their affiliation with the agency.


The AIC of an insurance agency is accountable for misconduct or violations committed by the licensee or agent or by any person under her or his supervision acting on behalf of the agency. However, the AIC is not criminally liable for the misconduct unless she or he personally committed the act or knew or should have known of the acts and of the facts that constitute the violation.

For complete information on the duties and responsibilities of the AIC, see Section 626.0428, F.S.

Sale of a Licensed Agency

If you sell your insurance agency you can arrange for the business name, assets, liabilities, building and equipment to transfer to the new owner as part of the sale, however, neither your license nor appointment is transferable. A license or appointment issued under the Florida Insurance Code is valid only to the person or entity named and is not transferable to another person. Please see section 626.441, F.S.

Accepting Referral Fees from Property Inspectors or Inspection Companies is Prohibited

An insurance agent, insurance agency, customer representative, or insurance agency employee is prohibited from directly or indirectly accepting any compensation, inducement, or reward from an inspector for the referral of the owner of the inspected property to the inspector or inspection company. This prohibition applies to an inspection intended for submission to an insurer in order to obtain property insurance coverage or establish the applicable property insurance premium. [See subsection 626.621(15), F.S.]


The Florida Statutes Are Available Online

The Florida Statutes can be viewed at Online Sunshine - Title XXXVII Insurance.